Stalwarts in the fashion industry are not looking forward to 2020. With most executives across apparel and clothing and the wider fashion world bracing for a slowdown in global economic growth, the only beacon amidst the gloom appears to be the Indian market.

The McKinsey Global Fashion Index forecasts that fashion industry revenue growth will slow further in 2020, down to 3-4 per cent, slightly below predicted growth for 2019. The most optimistic region is Asia (read China and India), although only 14 per cent of executives surveyed expect an improvement in conditions.

The staggering rate of store closures that has rocked the retail industry over the last couple of months, is expected to continue in 2020. Forever 21, the US retailer that helped popularise fast fashion in the United States (US) as well as in India, has filed for bankruptcy.

Diesel USA also filed for bankruptcy, as did Gymboree, the children's clothing retailer, available in India.

Clothing retailer Gap said it would spin off its more successful Old Navy brand into its own company while closing about 230 Gap stores around the world, or roughly 50 per cent, even as other retailers including Victoria's Secret and JCPenney are shuttering dozens of locations, including those in India.

As anxiety and concern continues to be the prevailing mood across the fashion world with slower growth putting pressure on margins, the digital shake-out gathering pace and consumers demanding more on sustainability, there are increased expectations from India.

Despite the current slowdown in the economy, the Indian clothing market is expected to be worth $53.7 billion in 2020, making it the sixth largest globally, according to the fourth annual State of Fashion report by The Business of Fashion and McKinsey & Company.

Elsewhere, political upheaval across the globe, broader macroeconomic uncertainty and the continued threat of trade wars has dampened retail sales. A general economic malaise in mature Europe is aggravated by the Brexit uncertainty, underscored by muted consumer sentiment in North America.

Exciting opportunity for price competitive players

India, too, has recorded a slump. The report states India’s economy is growing at its slowest pace in the past six years and the strain is starting to show.

India’s apparel exports are estimated to have declined by 17 percent in the first quarter of FY19 due to a slowdown in demand from developed countries. Data compiled by apex industry body, the Clothing Manufacturers' Association of India, showed India’s apparel exports at $1.35 billion and $1.34 billion in April and May 2018, a decline of 23 per cent and 17 per cent respectively. During FY18, apparel exports from India fell by 4 per cent to $16.72 billion.

Despite the slump, India continues to present an exciting opportunity, particularly for price competitive players, according to the report.

While the GDP growth this year has been somewhat weaker than expected, in part due to regulatory uncertainty, India is still projected to be the fastest-growing major economy, according to the IMF.

Notwithstanding the market’s challenges, the report adds, international players from H&M to Adidas are engaging with India enthusiastically.

Several other factors are aiding the growth trend. Internet retailing accounted for nearly 11 percent of the apparel market in 2018, double the proportion just three years ago, driven in part by increasing internet and smartphone penetration.

The report states India saw the strongest absolute growth globally in the number of internet users in the past year, while social media use has also expanded at around 25 percent annually, with nearly 70 percent of users active on Instagram. This provides a platform to introduce consumers to fashion brands away from the dominant informal market.